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Index reflects slower factory expansion

AN HSBC index that anticipates future Chinese manufacturing and employment points to expansion for a sixth month in September, with the job outlook at its highest level in 25 months.

The HSBC China Manufacturing Purchasing Managers Index was little changed at 55 last month on a seasonally adjusted basis, compared with 55.1 in August. A reading above 50 indicates expansion.

"Slower expansion in the index reflects that the recovery remains mild, but its foothold still needs more time to solidify," said Li Maoyu, an analyst at Changjiang Securities Co.

The output portion of the index fell to 57.6 in September from 58.4 a month earlier, the new orders index dropped to 58 from 59.3, and the export order index dropped to 54.4 from 54.9, HSBC Holdings Plc said today.

The employment portion of the index rose to 53, primarily in response to rising sales volumes and graduate recruitment programs, the bank said.

Qu Hongbin, chief China economist at HSBC, said the expansion of manufacturing employment in September is marked, although the headline index remains broadly unchanged from the previous month.

"New business growth remained substantial, signaling that the recovery in demand from both domestic and external sources is well on track," Qu said. "Rising employment in the manufacturing sector is even more encouraging because it suggests that China's infrastructure-led recovery is starting to spread over to the consumer sector."


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